Full Form of GRN – Goods Received Note
The full form of GRN is Goods Received Note. The GRN refers to the business document which is filled by the customer at the time of receipt of the goods from the seller in order to confirm the receipt of all the goods as agreed between the parties involved and its is often compared with the purchase order (PO) before issuing the payment to the seller of the goods.
Features of GRN
In manufacturing and other kinds of organization, where the organizational process includes transporting the goods from one place to another or transporting from outside market to the warehouse etc. goods receipt note plays a very important role. Sometimes, the processing time may be slow from the usual and this can be traced from the goods receipt note.
One of the important features of goods receipt note is that, where the goods are transported to the store, the store manager takes this document as proof as to whether the goods are as per the required quantity, whether the required quantity as written in the note is actually received or not. Hence the goods receipt note also becomes proof and becomes the audit trail.
What is to be Included in Goods Received Note?
Usually, in the organization, the job of the pre-print of the goods receipt note is of the store’s department. Hence the management should properly train them in terms of what all is required to be included in the goods receipt note. The following list is prepared on the important things to be included in GRN:
- The top of the GRN shows the name of the supplier of the goods.
- It is followed by the date and time of the issue and date and time of receipt of the goods by the store’s department.
- The proper address of the place where the goods are supposed to be transported and the place where the goods are supposed to be delivered along with the proper PIN code.
- The description of the goods getting transported along with the quantity of each kind of product, the rate and the price of the goods.
- The end of the GRN is done by the signature and name of the authorized personnel, of both the supplier as well as the store manager and the clerk who is supposed to receive the goods.
Process of GRN
The following is the process of GRN:
- The receipt of the invoice and challan and unloading of the goods to the stores.
- The physical verification of the number of goods received along with the description of the goods.
- If the goods are disputed or are of a short quantity, the supplier is contacted asking for the reason for the shortfall.
- After the quantity is checked, the quality test is made.
- An acknowledgment shall be made by challan and sent it to the supplier.
- After the above step, the receiving department will prepare the GRN in 5 copies. Original for them, and the remaining to the purchasing dept., accounts dept., one to the store manager and one to the person making the purchase requisition.
- Based on it, entries are made to stores ledgers.
- For any accounts department, the goods receipt note is a very vital document since it serves the purpose of the objectivity principle of accounting. Any entry in the books of accounts is compulsorily required to be supported by the proof in documentary form.
- Further, before making any payment of products to the seller, the goods are verified with the GRN. Also, in an organization, to reduce the probability of errors and frauds it is important that the work of one person is checked by another, and one person is not involved in more than 1 continuous process. Hence due to GRN, the organizational work is inspected by different people.
- Since the actual physical quantity of goods is checked with the goods receipt note; payment is only made for those goods which are actually received. Hence wrongful payment is avoided.
- This document also places an important role in the supplier. The supplier can prove with the help of the GRN that the goods have been dispatched from their end as the GRN is an official legal document and can be accepted as proof in the court of law.
Goods Received Note vs Goods Dispatch Note
The following are the differences between Goods Received Note and Goods Dispatch Note:
- The Goods dispatch (GDN) is raised by the supplier’s dispatch department while the Goods Received Note is prepared by the purchaser’s receiver department.
- Without a GDN raised, the supplier’s accounts department cannot raise the invoice while, without GRN, the purchaser’s department cannot make payment or entries in the books.
The following are the benefits of the goods received a note:
- It works as evidence for auditors and hence included in the audit trail procedures.
- GRN shows the actual quantity received and hence the loss of higher payment to the suppliers can be detected.
- It is delivery proof. It is a legally enforceable document and can be submitted in the court.
- The personnel in the logistics team become accountable in case of errors or frauds since the quantity should always match with the GRN quantity. A sense of responsibility and alertness is created among the team.
- The financial departments of bigger firms can use this document for comparison purposes as to how much quantities of goods ordered and how much has actually been received and entered in the books.
GRN is the abbreviation used for goods received the note. As the name implies, goods received note is the note of the confirmation of the receipt of the goods by the customer or the buyer from the seller which is filled by the buyer at the point when the goods are actually received. It is an official legal document and can be accepted as proof in the court of law.
This has been a guide to the Full Form of GRN and its definition. Here we discuss the process of Goods Received Note along with its features, importance, and differences. You may refer to the following articles to learn more about finance –